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Just as soon as President Obama put out his corporate tax plan yesterday, you could hear it. You could hear a Republican party and corporate lobby chorus that is complaining loudly that the president's plan doesn't lower the highest marginal rate enough (from the current 35% to 28%), and that it takes away too many of their boondoggles. You could also hear the always-poutraged "Left" whine about how this makes Obama a corporate lackey.

But doesn't anyone want to know what's in the actual framework the president and the Treasury department released yesterday, rather than a bunch of mumbo jumbo on political tea-leave reading? I did. So I did something crazy. I read the damn thing. When I read it, I discovered that it wasn't a document on political gimmickry - as both Huffington Post and Fox News kept telling me, that it's rather specific, and that it is a plan for an American century. Yes, the President did not spoonfeed every single possible legislative term, but the Constitutionalists among us might remember that it's the Congress' job to write legislation.

The president's framework, more than anything, is a document that lays out the problems in our current, outdated corporate tax code, and proposes targeted reforms as solutions. Hey, whaddya know. A president who's interested in solving problems. In that spirit, I will outline below the what I think is the central problem the president addresses and what specifically he proposes to do about it. There are quite a few other things in the president's proposal to level the playing field and bring tax fairness, but for this piece I will concentrate on what the really central theme is in the president's proposal.Problem: Statutory rates put American domestic businesses at a disadvantage.

Before you laugh and say "ha ha, no one pays the statutory rate," and dismiss what I'm about to say, bear with me a second.

Our statutory highest federal marginal corporate tax rate is 35%. Taking into account the effect of state and local corporate taxes on an weighted basis, the statutory maximum marginal rate is 39.2%, a full 11 points higher than the average tax rate of other developed countries (countries in the Organization for Economic Cooperation and Development (OECD)). This is the case despite the fact that our effective highest marginal tax rate on corporations is just about in line with that of other developed countries, in fact, we are a couple points lower (31% for others vs 29% for us).

This is a problem on two fronts. First of all, what do you think it takes to get that statutory maximum rate of 39% down to the effective maximum of 29%? That's right, tons of accounting gimmicks, tax lawyers and lobbyists to hold out these loopholes in the tax code for corporations to lower their effective tax liability, or to move profits offshore to avoid taxes altogether. Just exactly what kind of corporations can afford them? Big multinationals. So you arrive at a tax code that is weighed heavily in favor of rich multinationals who can employ these tax avoidance resources, shifting the burden to smaller, domestic corporations instead.

Just as an example, here's a demonstration of just one of the loopholes - the "move your profit to the Caymans" loophole. Look at these small countries whose share of American company profits is far higher than their GDP, indicating that the profits obviously did not come from adding to the economic activity of the given country.

The second problem it represents is this insanely complicated tax code, along with the high statutory rates, discourages people who want to set up businesses that want to focus on hiring the best engineer they can find rather than finding the best tax attorney and the most cunning accountants money can buy.

Solution: Bring down the statutory rate, invest in building things, and shut the door on loopholes and lobbyists

I know I will shock you when I say this, but a whole lot of our corporate tax breaks have to be renewed periodically, keeping lobbyists employed. Some of these tax breaks make sense, but most don't. So, what if you made permanent the breaks that really help reinvest in the American people, eliminated the rest, and made it easy for people to file? What if you could file a corporate tax return? Well, that's exactly what the president's framework does.

Bring down the rate: It brings down the statutory highest marginal rate to 28%.

Make the R&D credit permanent: It makes permanent the research and development tax credit. The R&D tax credit generates at least $1 in private sector investment for every dollar foregone in tax revenue, with some recent studies finding the investment to be closer to $2 or $3 per dollar foregone in tax revenue. To avoid confusion on this, recall that the tax credit involves corporations not having to pay taxes on the dollars invested in R&D, not taking off $1 from their total tax liability for each dollar invested.

Manufacturers and clean energy manufacturers get extra breaks: Manufacturers would have their top marginal rate brought down to 25%, and clean energy manufacturers - people who make solar panels, batteries, wind turbines, etc. - would get an extra break by the means of making their R&D tax credit refundable - meaning that if they invest enough in research and development of new, clean energy technologies, they would get a subsidy for doing so. This refundable credit would be permanent.

Close down the loopholes for multinationals: The president's plan would close down all the other loopholes corporate tax loopholes buried into the tax code. But here are a few important ones that he would end. Oil and gas tax credits for drilling? Gone. They can make plenty of profit on their own, and with a net negative social and environmental value, there is no reason why taxpayers should be subsidizing or adding to their profits. No more corporate jet tax breaks.

The president's proposal would eliminate accounting gimmicks like "last in, first out." What the heck is that? LIFO, as it is known, is an accounting mechanism that assumes the cost of every unit sold is the cost of the latest units to hit the inventory - i.e. the higher end price. That is, if a corporation's cost of acquiring the last coffee mug in its inventory is $7, and they sell a mug for $10, they are considered to have a $3 profit, even if the actual mug they sold has been sitting in the inventory for 2 years and 2 years ago, it actually cost $5 to acquire. You can see how this gives them $2 tax-free profit for that mug. Ending this and bringing the system in line with international standards that takes the average cost of per-unit inventory into account would both level the playing field and add to tax revenue.

Another important gimmick the president would get rid of is crazy insurance scams. Right now, corporations can buy life insurance on their employees or executives and use the gains in the insurance policy to borrow against it, and then take tax deductions on the interest payments. They won't be able to do that if the president's framework is legalized.

The Cayman party would also come to an end should the president's framework be enacted into law. The president would set a minimum tax for profits earned - or moved (by accounting gimmicks) - overseas. No more indefinitely putting off profits into a tax shelter in Bermuda and avoiding taxes. Companies would get credit for actual foreign taxes paid - so if they earn profits and pay taxes in a country with similar rates as ours, they wouldn't owe anything here. This encourages international competition from a fair playing field and closes the loophole that you can fit a few Cayman islands through.

But the most important among the loopholes the president would close might be this one: call it closing the Mitt Romney loophole. You might remember that earlier this month, I wrote about capital gains and carried interest, and how fund managers take advantage of "carried interest" by counting all of their salaries as "investment income" (since they manage funds invested and are paid a percentage of the gains thereof). That's how Romney's tax rate is 13.9%. Obama's plan would treat "carried interest" as ordinary income. This, along with the president's insistence that the Bush tax breaks for the ultra-wealthy would bring a very substantial amount of new revenue, while making the entire tax system - not just corporate taxes - fairer.

Conclusion

Once again, I encourage everyone to actually read the president's proposal. It's not a surprise that our media by and large have done a poor job on describing or analyzing the president's framework. But maybe in 2012, there are still people who care about actually identifying problems and solving them rather than sitting around checking off ideological boxes or lamenting about how Congress is essentially allowed to be on vacation every other year. Can we get some adults in the room, please?

Elizabeth Warren made her name because of a specific policy idea that was her brainchild: the Consumer Financial Protection Bureau. Yet, since having become a Senator, Warren seems to have accomplished little more than yelling at the banks, who admittedly deserve to be yelled at. But Warren has not sponsored a single piece of legislation on direct bank regulations, supposedly her cause celeb, in this Congress. Is she sliding down the path to irrelevancy thanks to her canonizing celebrity from the ideologue Left who value talk more than action?

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